The main key performance indicators of Software Asset Management (SAM) are typically quantified in a financial value. These financial values are typically referring to the cost avoidance and cost savings achieved. Next to this, SAM is typically being used to internally cross charge the fees related to the different software licenses and/or the associated support and/or cloud costs. But what is the real difference between cost avoidance and cost savings? And what specific costs do fall into what specific category?
The majority of companies worldwide, regardless their industry, are typically most interested in cost savings when it comes to software spending. This, since achieving a cost saving actually means to reduce the amount of money that has been spent (or was planned to be spent) compared to the past. Examples of situations that typically fall in this category are:
In addition, many end user organizations typically have multiple software programs for the same functionality. Think for example about Quest’s Toad for Oracle and Oracle’s Database Management Packs. End users that look into the kind of situations mentioned above and choose for one or the other are typically able to benefit of considerable cost saving opportunities.
Most often companies do not realize the actual value that is saved when a non-compliance situation is avoided. When end-user organizations perform regular internal reviews where compliance issues are identified and remediated before the publisher determines these compliance issues through an audit, then the spending that is avoided is classified as “cost avoidance”. Examples of situations that typically fall in this category are:
It is quite common that end-user organizations do not keep track of their software licenses. The day-to-day practice teaches us that when some employees leave the company or devices get broken, their associated licenses are simply forgotten. Or, when new individuals join the organization and new devices (desktops/laptops/servers) are being purchased, new software is being purchased as well and money is spent.
As obvious as it may seem, many organizations seem to forget that non-compliance is costly. Monitoring and controlling your compliance situation is important and, in the long run, it will be cheaper to invest in knowledgeable people, tools and processes instead of being found non-compliant, having to pay penalties, and facing a non-budgeted significant financial exposure.
Find out about cost saving opportunities in your organisation. Contact us today and schedule a personalized advisory meeting with our IT Asset Management experts!
Find out about cost saving opportunities in your organisation. Contact us today and schedule a personalized advisory meeting with our IT Asset Management experts!
